Financial markets are rattled, old alliances are strained, and a new economic order is emerging from the turbulence. For India, it’s both a warning and an opening
In the world of economics and global finance, leaders are expected to act like chess grandmasters — calculating moves, predicting ripple effects, and maintaining balance. However, U.S. President Donald Trump has never played by the conventional rulebook. Instead, he behaves more like a quark — an unpredictable, elementary particle that defies classical physics — shaking the very structure of global trade. His recent tariff decisions, especially the 90-day pause on reciprocal tariffs and the astonishing rise of Chinese levies to 125 per cent, have sent shockwaves through financial markets, policymaking corridors, and diplomatic tables across the globe. The question looming large: is Trump’s tariff medicine a masterstroke or a global economic blunder?
Trump’s announcement of a 90-day pause with a lowered reciprocal tariff of 10 per cent might seem like a temporary balm, but beneath the surface lies a geopolitical earthquake. For China, the world’s manufacturing powerhouse, the 125 per cent duty effectively turns its goods radioactive in the US market. While some may see this as economic retaliation, others view it as the opening salvo of a prolonged trade war — a war where missiles are replaced by levies and stock exchanges.
Global markets didn’t wait long to respond. From Wall Street to Shanghai, red arrows flashed on trading screens. The tariff tremors were felt in every major economy as investors scrambled to assess the long-term damage. The Dow dipped, the yuan trembled, and crude prices jolted. It wasn’t just about Chinese toys or American soybeans anymore; it was about trust, stability, and the very framework of globalisation.
Trump’s economic doctrine rests on one core belief — America First. His logic is straightforward: if other countries impose high tariffs on American goods, then America must mirror them with equal or greater force. Hence, the idea of a “reciprocal tariff” was born. India, for example, was slapped with a 26 per cent import duty, justified by Trump’s claim that India imposes over 50 per cent in combined tariffs and non-tariff barriers on American products.
But here’s where the irony becomes poetic. While the US believes such actions are punitive, countries like India may benefit from this economic standoff. As American companies shift supply chains out of China to avoid the tariff trap, India emerges as a natural alternative. Its young workforce, improving infrastructure, and digital readiness position it as a promising destination for industries fleeing the dragon’s grasp. Moreover, the trade war forces China to seek alternate markets for its products and technology, and India — with its 1.4 billion people — cannot be ignored. But India must tread carefully. While it gains bargaining power in bilateral trade negotiations, it must protect its domestic industries from being flooded by surplus Chinese goods at slashed prices.
Trump’s tariff gambit also rattles the World Trade Organisation, whose authority has already been waning. His actions, unilateral and swift, undermine the consensus-based global trading order. The WTO, conceived to prevent such economic warfare, now risks being reduced to a ceremonial relic. With Trump rewriting the rules, institutions built post–World War II, from Bretton Woods to Geneva —- appear helpless. History, however, is not on Trump’s side. In 1930, the US Smoot–Hawley Tariff Act tried similar protectionist measures, raising import duties on over 20,000 goods. The result? A deeper, longer Great Depression. Again, in the 1970s, Nixon’s 10 per cent import tax combined with the oil crisis led to stagflation — a toxic cocktail of inflation and unemployment. The lesson is clear: tariffs may protect in the short term but often punish in the long run.
Trump may believe he’s reviving Rust Belt factories and reclaiming lost manufacturing glory, but the economic universe doesn’t work in isolation anymore. In a hyper-connected world, supply chains snake across borders, and a tariff on one nation boomerangs through ten others. The iPhone in your hand, assembled in China and designed in California, uses rare-earth elements from Africa and chips from Taiwan. You cannot tariff your way into prosperity without igniting unintended consequences.
Still, Trump remains undeterred. On 2 April, standing in the White House Rose Garden, he proclaimed “Liberation Day”, unveiling his 185-country reciprocal tariff list, ranging from 10 per cent for Afghanistan to 50 per cent for Lesotho. He branded 15 nations as the “Dirty Fifteen”, allegedly commercial threats to America. India, ominously, ranks 11th on this list.
But here lies the paradox. Trump’s erratic style may yet yield an unexpected dividend for India. As China and the US lock horns, India gains manoeuvring space. New export opportunities arise, investment redirections follow, and global attention shifts. But only if India plays its cards with finesse — balancing its ties with both economic giants, while strengthening internal capacity. The Indian Council for Research on International Economic Relations (ICRIER) warns that arbitrary tariff hikes – whether incoming or outgoing — can corrode economic health.
After all, trade is not war. It is negotiation. It is mutual gain. It is diplomacy in spreadsheets.
Trump’s tariff storm is not just an economic event, it is a political statement. It says America will no longer be the generous superpower underwriting the global economy. It will be transactional, like its president – a businessman who sees countries not as allies but as clients. Whether this quark-like behaviour will collapse the atom or reshape it is still unfolding. But one thing is sure: the world cannot afford to ignore Trump’s tariffs. For India, the chaos brings opportunity. For China, it signals the need for recalibration. For the world, it is a reminder that the global economic order is far more fragile than we think. And as Trump tweets his next move, stock markets hold their breath.
(The writer is Professor, Centre for South Asian Studies, School of International Studies & Social Sciences, Pondicherry Central University, India. Views are personal)
